Goldman Asked If We Are Running Out of Oil and the IRGC Just Answered

An oil shortage is no longer a theoretical risk. Right now, traders and governments alike are measuring it in days of remaining supply. Goldman Sachs published a note this week asking whether the world is running out of oil. The bank’s answer: not globally, but regionally the situation has already turned critical. Jet fuel exports from the Gulf have collapsed 85% since the war began, naphtha is down 73%, LPG 65%, and diesel 55%. Goldman Sachs warns that OECD commercial crude inventories will hit their operational minimum by late April or early May. And then, on Sunday, Iran’s IRGC struck energy infrastructure across the UAE, Bahrain, and Kuwait, and made the oil shortage problem considerably worse in a single afternoon.

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Jet Fuel Is Down 85% and Asia Is Weeks Away From Running Out of Naphtha

Asia at the Center of the Supply Crunch

Goldman Sachs identifies Asia as the epicenter of the tightness, with South Korea, Japan, Singapore, India, and Thailand facing the fastest depletion. Some of these countries draw nearly three-quarters of their refined fuel from the Persian Gulf, and right now none of them has a short-term alternative lined up. Hormuz transit has fallen from 20 million barrels per day before the war to below 2 million, a disruption the IEA calls three times larger than the 1970s oil shocks.

Goldman Sachs strategists, led by Daan Struyven, stated:

“Under our assumption of substantial March Hormuz disruptions, we estimate about 200mb of Middle Eastern crude production losses and large draws in OECD commercial inventories in March. Inventories are projected to fall by about 76 million barrels month-on-month, compared with a previous assumption of a 10 million barrel build.”

IRGC Hits ExxonMobil, Chevron, and Kuwait in Wave 96

On Sunday, the IRGC launched what it called the 96th wave of Operation True Promise 4. ExxonMobil and Chevron gas facilities in Habshan, UAE, and a petrochemical plant in Al Ruwais caught fire. Drone strikes also hit the Sitrah complex in Bahrain and the Shuaiba facility in Kuwait, shutting it down completely. The IRGC Gulf strikes marked only the first phase of retaliation, according to the Guard’s own statement.The IRGC mentioned, in a statement carried by Iranian state broadcaster IRIB:

“If the attack on civilian targets is repeated, the second phase of this operation will be much more devastating and widespread, and their losses and damages will be doubled if they insist on this approach.”

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Europe Demands Windfall Tax as Prices Surge

Gas prices across the bloc have risen more than 70% since the U.S.-Israeli war with Iran started on February 28. The finance ministers of Germany, Italy, Spain, Portugal, and Austria sent a joint letter to the European Commission demanding a bloc-wide windfall tax on energy companies. EU Energy Commissioner Dan Jorgensen warned this week that the Europe energy crisis will not fix itself anytime soon.

The five EU finance ministers wrote:

“The conflict in the Middle East has caused oil prices to rise, placing a significant burden on the European economy and on European citizens. It would also send a clear message that those who profit from the consequences of the war must do their part to ease the burden on the general public.”

EU Energy Commissioner Dan Jorgensen warned:

“Fuel prices are unlikely to go back to normal in a foreseeable future.”

German truck companies now pay an extra 1,200 euros a month in diesel, with analysts putting up to 100,000 driver jobs at risk. The IRGC Gulf strikes this weekend, described by the Guard as only Phase One, have made the global oil shortage impossible to ignore.

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